Top tips for China

Read this if you are considering exhibiting at FHC in Shanghai in November. The Chinese market offers incredible opportunities but would-be exporters face tough challenges in a market with limited knowledge of the UK’s strengths.

The Chinese market has grown at an average rate of 9% since 1978 – an astonishing rate given that EU economic growth stood at 2.7% in 2006. China’s massive and increasingly wealthy population represents a huge opportunity to UK producers with the right entry strategy. However, the huge market is highly fragmented and smaller companies will need to consider channels other than mainstream retail, where big brands rule the roost.

Emma Walters, FFB’s Development Markets Manager, reports on the key features of the Chinese food and drink market relevant to UK exporters.

Big appetite for brands

“The Chinese retail market is interested in big brands. You can sell a product to them if it is, for example, the biggest-selling tea in the UK, but you will face more of a challenge if your brand isn’t well-established in the UK.

“That said, established UK brands have a big opportunity: the CEO of leading distributor Sinodis is visiting FFB this month (see our Asia-Pacific Workshop page for more information) with a view to adding new British brands to its portfolio. The Chinese trade may not know much about the UK’s strengths, but they’re seeing results from our products in their sales.”

Limited private label

“Private label is still a developing concept in China. Some of the modern retailers have private label ranges but they are very limited. Retailers are having to educate their customers about the benefits of their own-branded products, which aren’t immediately obvious: private label goods can be much more expensive than their branded counterparts.”

Partners essential

“Labelling regulations change frequently in China, so a partner on the ground is essential. While it’s no longer a legal requirement that foreign companies operate as a joint venture with Chinese companies, most foreign companies have stayed with their joint venture partner simply because it enables them to remain up-to-date with legal requirements and, in some cases, gives them direct access to a market for which they’d otherwise have to compete against partner.”

Smaller company? Consider premium foodservice

“If you don’t have a well-established brand in the UK, don’t give up altogether! There’s a massive opportunity for UK producers in premium foodservice. Increasingly rich Chinese consumers are driving growth in hotels, bars and restaurants in key urban areas. A word of warning though: the market is highly fragmented and can be difficult to approach.  With a good partner though the rewards could be fantastic.”

The Food & Hospitality China show

FFB is running the British pavilion at FHC in Shanghai on 14-16 November 2007. With the right preparation, the show is a great starting point to get a feel for the Chinese market. Speak to Jane Wakeling, Head of Client Development at FFB, to discuss what you can do to find out if China is right for you, on jwakeling@foodfrombritain.co.uk. Contact Sarah Briones on sbriones@foodfrombritain.co.uk to learn more about exhibiting at FHC, or visit FFB’s FHC page.

05 September 2007